To protect employees and retirees from corporate practices that deprive them of their earnings and retirement savings when a business files for bankruptcy.

SA 49. Mr. DURBIN (for himself, Mr. Kennedy, and Mr. Dayton) proposed
an amendment to the bill S. 256, to amend title 11 of the United States
Code, and for other purposes; as follows:

On page 499, strike line 3 and all that follows through
page 500, line 2, and insert the following:

SEC. 1402. FRAUDULENT TRANSFERS AND OBLIGATIONS.

(a) Federal Fraudulent Transfer Amendments.--Section 548 of
title 11, United States Code, is amended--
(1) in subsection (a)(1)--
(A) by striking ``one year'' and inserting ``4 years'';
(B) in subparagraph (A), by striking ``or'' at the end;
(C) in subparagraph (B), by striking the period at the end
and inserting ``; or''; and
(D) by adding at the end the following:
``(C) made an excess benefit transfer or incurred an excess
benefit obligation to an insider, if the debtor--
``(i) was insolvent on the date on which the transfer was
made or the obligation was incurred; or
``(ii) became insolvent as a result of the transfer or
obligation.'';
(2) in subsection (b), by striking ``one year'' and
inserting ``4 years''; and
(3) in subsection (d)(2)--
(A) in subparagraph (C), by striking ``and'' at the end;
(B) in subparagraph (D), by striking the period at the end
and inserting ``; and''; and
(C) by adding at the end the following:
``(E) the terms `excess benefit transfer' and `excess
benefit obligation' mean--
``(i) a transfer or obligation, as applicable, to an
insider, general partner, or other affiliated person of the
debtor in an amount that is not less than 10 times the amount
of the mean transfer or obligation of a similar kind given to
nonmanagement employees during the calendar year in which the
transfer is made or the obligation is incurred; or
``(ii) if no such similar transfers were made to, or
obligations incurred for the benefit of, such nonmanagement
employees during such calendar year, a transfer or obligation
that is in an amount that is not less than 25 percent more
than the amount of any similar transfer or obligation made to
or incurred for the benefit of such insider, partner, or
other affiliated person of the debtor during the calendar
year before the year in which such transfer is made or
obligation is incurred.''.
(b) Fair Treatment of Employee Benefits.--
(1) Definition of claim.--Section 101(5) of title 11,
United States Code, is amended--
(A) in subparagraph (A), by striking ``or'' at the end;
(B) in subparagraph (B), by inserting ``or'' after the
semicolon; and
(C) by adding at the end the following:
``(C) right or interest in equity securities of the debtor,
or an affiliate of the debtor, held in a pension plan (within
the meaning of section 3(2) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(2))), including an
employee stock ownership plan, for the benefit of an
individual who is not an insider, officer, or director of the
debtor, if such securities were attributable to--
``(i) employer contributions by the debtor or an affiliate
of the debtor other than elective deferrals (within the
meaning of section 402(g) of the Internal Revenue Code of
1986), and any earnings thereon; and

[[Page S2049]]

``(ii) elective deferrals (and any earnings thereon) that
are required to be invested in such securities under the
terms of the plan or at the direction of a person other than
the individual or any beneficiary, except that this
subparagraph shall not apply to any such securities during
any period during which the individual or any beneficiary has
the right to direct the plan to divest such securities and to
reinvest an equivalent amount in other investment options of
the plan;''.
(2) Priorities.--Section 507(a) of title 11, United States
Code, is amended--
(A) by redesignating paragraphs (8) and (9) as paragraphs
(9) and (10), respectively;
(B) by redesignating paragraphs (6) and (7), as
redesignated by section 212, as paragraphs (7) and (8),
respectively;
(C) in paragraph (7), as so redesignated, by striking
``Sixth'' and inserting ``Seventh'';
(D) in paragraph (8), as so redesignated, by striking
``Seventh'' and inserting ``Eighth'';
(E) in paragraph (9), as so redesignated, by striking
``Eighth'' and inserting ``Ninth'';
(F) in paragraph (10), as so redesignated, by striking
``Ninth'' and inserting ``Tenth''; and
(G) by striking paragraph (5), as redesignated by section
212, and inserting the following:
``(5) Fifth, allowed unsecured claims for contributions to
an employee benefit plan--
``(A) arising from services rendered before the date of the
filing of the petition or the date of the cessation of the
debtor's business, whichever occurs first; but only
``(B) for each such plan, to the extent of--
``(i) the number of employees covered by each such plan
multiplied by $15,000; less
``(ii) the aggregate amount paid to such employees under
paragraph (4), plus the aggregate amount paid by the estate
on behalf of such employees to any other employee benefit
plan.
``(6) Sixth, allowed claims with respect to rights or
interests in equity securities of the debtor, or an affiliate
of the debtor, that are held in a pension plan (within the
meaning of section 3(2) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(2)) and section
101(5)(C) of this title), without regard to when services
were rendered, and measured by the market value of the stock
at the time the stock was contributed to, or purchased by,
the plan.''.
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